Crypto Academy

Decentralized financing

Decentralized financing

6 min reading

Heard a lot about decentralized financing and you wonder what it is and how it functions? Read this article to find answers.

Why do we speak of decentralized finance

Decentralized financing (DeFi)

The first thing one hears when cryptocurrency is mentioned is that it is decentralized finance. As a newbie, it is inevitable not to wonder what this is all about. However, this article will be explaining everything you need to know as a starter about decentralized finance.

What is Decentralized Financing?

Decentralized financing is a transition from traditional centralized financial methods to peer-to-peer financing enabled through the use of centralized technology. While centralized financial systems are run by exchanges where transactions must be moved from one central location to another, decentralized financing is provided by a code that runs on a decentralized infrastructure. The goal of decentralized financing is to create financial services on a decentralized basis using blockchain and small contracts.

Decentralized financing, also known as DeFi, is advantageous and better than a centralized financial system. What is its advantage? It contains highly programmable smart contracts that automate execution and enable the creation of new financial instruments in digital assets. The data cannot be tampered with because the blockchain architecture increases security and verifiability. The composite software stack ensures that DeFi protocols and applications are integrated and complementary. On the public blockchain, each transaction is broadcast for verification by other users on the network.

How does it work?

With DeFi, anyone with a wallet and an Internet connection, regardless of location and without funds, can access DeFi applications. DeFi participants always keep their personal data in custody. One of the main goals of decentralized finance is to stop third parties from participating in transactions. This is why DeFi relies on Ethereum blockchain technology as it is more advanced than other blockchain technologies, easy to use, and adaptable depending on the needs of the particular system. DeFi is irreversible and is rapidly gaining ground in the financial world to the point where governments and other financial institutions take an interest in it since anyone has enough room to step in and create a new financial product.

This process has not yet been fully implemented, but some countries such as Japan, Estonia, Sweden, and many others are working hand in hand to make cryptocurrencies a new type of currency and are therefore investing in DeFi technologies.

DeFi Advantages

To better comprehend the benefits of using decentralized finance, we will take a quick example of one which is Bitcoin. Due to its virtual nature, there are inherent benefits that come with using it, one of which is autonomy. It allows users to have autonomy over their economy, meaning users can spend their money without the influence or interference of a third party.

Also, there is discretion and anonymity. unless a bitcoin trader publishes his transactions and reveals his identity, no one will be able to trace the transaction back to him. With bitcoin, transaction fees are equally very low and these transactions are fulfilled in a split of seconds. There is therefore no need to wait for hours or days for a single transaction to be completed.

In short, decentralized financing is a general term associated with the vision of a financial system that requires no intermediaries such as banks or insurance companies and operates solely on the basis of smart contracts. These applications aim to provide traditional financing services without any authorization, globally and transparently. 

Blockchains and cryptocurrencies have a lot to offer to the real world, but the only problem is that they seem to have a big impact on centralized financial systems. This is due to the fact that there are so many new processes and decentralization is taking financial markets to a new level.

Conclusions

What is digital identity?

What is digital identity?

7 min reading

Do you desire to understand what digital identity is all about? Keep reading to expand your knowledge about it.

What is digital identity

What is digital identity?

Digital identity is information obtained about a person or organization on the Internet. It includes identifiers and uses templates that make it easy to find people or their devices. Digital identification is used both in cryptocurrencies and in other areas of business. This can be a pseudonymous profile associated with the device’s IP address. Data points that help shape digital identities include usernames and passwords, driver’s license numbers, online purchase history, date of birth, internet searches, and more.

Traditional digital identity management systems are today viewed as fragmented, insecure, and exclusive. Thus, this led to the creation and organization of blockchain blocks.Indeed, blockchain enables more secure management and storage of digital identities, providing a unified and tamper-proof infrastructure. 

These digital identity management systems can be used to address current identity management issues such as unavailability, data insecurity, and fraudulent identities. There are centralized and decentralized identification systems. A centralized digital identity system is a system in which one organization identifies and manages it, while a decentralized identity system includes the person who is at the center, while institutions and private companies simply add details. Links to a central site that is individually controlled.

How is digital identity created?

In cryptocurrencies, in order to create a digital identity, users must register with a self-identity and data platform. During the registration process, the user creates a pair of private and public keys. These public keys are associated with a DID (decentralized identifier) and can be saved and restored or replaced for security reasons. 

How digital identity works for companies, IoT devices, and individuals.

Companies usually create digital identities in order to collect information about their users, employers, business partners as well as other beneficiaries. This could however shift the company’s focus to that of IT responsibilities. Internet of Things (IoT) devices employ digital identities for several reasons and for different purposes. Technical analysts predict that there will be 41.6 billion connected IoT devices by 2025. Early internet consisted solely of trusted institutions but with the rapid evolution in the digital world, IoT devices do not incorporate appropriate identity and access management capabilities.

These devices identify sensors, monitors, and devices and also manages access to sensitive and non-sensitive data. 

Digital identity for individuals is very necessary for society and the economy and it comprises basically an individual’s first and last name, date of birth, nationality, and other identifiers like passport number as well driver’s license. This information is issued by centralized entities and stored in their databases. The major drawback about these digital identities is that they are subject to hacking.

Why do we need blockchain for digital identity?

Given the current concerns that have been raised regarding the security of traditional digital identity management systems, Blockchain provides a method of relief to ensure the security of an individual’s identity. Therefore, we need a blockchain for digital identity, because it is inaccessible, secure, and does not allow any fraudulent activities.

There is no doubt that using a decentralized identity comes with some level of security and safety. The principal way of securing decentralized identities is by the use of cryptography whereby private keys are only known by their owner while public keys are distributed widely and this takes place at two levels. With the first authentication, the public key verifies that the holder of the paired private key sent a message which then leads to the second stage which is encryption. Here the private key holder can decrypt the message encrypted with the public key. With decentralized identity, users can present the verified identifier in the form of a QR code to prove access to certain services. 

In conclusion, digital identity is relevant in a wide variety of situations where people and organizations are required to prove who they are. This is reflected in the variety of approaches used in different identification and access systems. They are also very important for the growth and expansion of any business. Having a suitable way to identify ourselves allows us to set unusual goals.

Conclusions

What is the origin of cryptos?

What is the origin of cryptos?

5 min reading

Discover where the idea of cryptocurrency came about and how everything changed since then.

What is the origin of cryptos

What is the origin of cryptos?

Cryptocurrency is a digital asset that has been designed to work as a medium of exchange where individuals’ coins are stored in a ledger that exists in the form of a computerized database. This database uses strong cryptography to keep safe transaction records, rule the creation of new coins, and verify the transfer of coin ownership. It is a purely peer-to-peer electronic money that allows online payments to be made without the intervention of financial institutions. It can also be seen as a form of payment that can be exchanged for goods and services. Unlike centralized banking systems, cryptocurrencies are decentralized.

How everything started?

In 1983, David Chaum created an anonymous cryptocurrency named ecash. Subsequently, in 1995, he applied it with Digicash and the first payment method, which required the user’s software to skim the bills and assign specific encrypted keys before they could be sent to the recipient. It has rendered the digital money untraceable by the issuing bank, the government, or any other third party. 

In 1998, Wei Dai, a computer engineer known for his great contributions to the field of cryptography and cryptocurrency, published a description of “b-currency”. He described it as a distributed anonymous electronic money system. In his proposal, he described two ways to store transaction data. In the first method, each participant will maintain a separate database of amounts owned by users, and all of these records are maintained by a specific group of users. In the second method, transaction record-holders are encouraged to remain honest because their money is in a special account and could be lost if any form of dishonesty is discovered. Later in 2005, Nick Szabo, a computer scientist, lawyer, and cryptographer, developed a decentralized digital currency mechanism he called Bitgold. Although Bitgold was never implemented, it was seen as a direct omen of Bitcoin’s architecture. Like Bitcoin and other cryptocurrencies, Bitgold has been described as an electronic money system that required users to perform zero-knowledge cryptographic computations, in which one party proved to the other that a series of settlement efforts were invested with a specific purpose. 

Once a settlement is complete, verifiers can confirm the transaction with minimal effort.This technique is known as Proof of Work (PoW), invented by Cynthia Dwork and Moni Naor in 1993 as a way to counter denial of service attacks and other abuses of service.

Benefits of cryptocurrencies in the future

Cash is losing its relevance, while digital money is becoming more widespread. Bitcoin and other cryptocurrencies, which in recent years have generated significantly more profit than traditional assets, are benefiting from this. Many economists tend to believe that in the future paper money will disappear altogether and be replaced by electronic money, that is, the essence of money will remain unchanged, but its form will change as money moves into the realm of virtual reality. The place of cryptocurrencies in modern monetary theory is still debated, but in practice, virtual cash becomes the currency of the world economy and its financial markets. Also, the transformation of types of money is due to the influence of the legitimate development of society. Obviously, the process of changing the types of money is facilitated by technological and scientific progress. It is believed that this contributes to an additional impetus for the development and wider use of cryptocurrencies.

However, the emergence of cryptocurrencies has led to the creation and operation of new global and decentralized networks that have been used by over 100 million people around the world to transfer billions of dollars of value. These networks have facilitated transactions without the interference of any third party. It is indeed a great development to the digital world and can fit better given the century we are in.

Conclusions

Are cryptocurrencies legal?

Are cryptocurrencies legal?

5 min reading

Many people are interested in the question of the legality of cryptocurrency. Let's try to understand it together.

Are cryptocurrencies legal

Are cryptocurrencies legal?

There is no doubt that cryptocurrencies, including bitcoin (BTC), are the future, which will come sooner or later. Years, decades, or centuries from now, it will finally become clear to everyone that it is a cryptocurrency that provides the best value for money. Although right now miners and traders are still concerned about bitcoin’s legality, the time will come when it will become the most common currency.

Since the beginning of the first cryptocurrency, the global cryptocurrency market has grown significantly, and there are many participants who are looking for benefits in the cryptocurrency industry. The scope of their application ranges from fast and safe completion of payments to exchange operations, investments, the realization of smart contracts and the decentralized computing platform, and many other things. 

The scale of growth of the cryptocurrency industry does not go unnoticed by either government agencies or commercial or ordinary users. One of the pressing issues is to define what the cryptocurrency industry is in its entirety and how it fits into the existing framework of the world system.

Possible risks

However, most of the risks which accompany the circulation of cryptocurrencies are impossible to exclude because they belong to the functional and not the financial area. The most significant is regulatory risk. According to experts, if the cryptocurrency market becomes regulated, many more people will join the adventure. A regulatory ban is always bad news for the sector and impacts the global value of the ecosystem.

Benefits of cryptocurrencies

Cryptocurrencies have many useful properties that regular money sometimes lacks. New money is provided with the energy needed to create the necessary mathematical processes. The increase in speed and efficiency of processors generates inflation, which is counterbalanced by the growing demand for this energy.

Different countries’ attitudes toward cryptocurrencies

Businesses are already ready to use cryptocurrencies, smart contracts, and other blockchain tools, and the world’s largest banks are not only studying but already implementing new modifications of blockchain and alternative analogs. The legal status of cryptocurrencies varies greatly from country to country. A number of the country’s cryptocurrency transactions are officially allowed. They are usually viewed as a commodity or investment asset and are subject to the relevant legislation for tax purposes. In Germany Bitcoin is recognized as a unit of account, in Japan Bitcoin is legal tender with a purchase tax.

Global trends and vectors of cryptocurrency regulation in certain regions were formed 7-8 years ago, and neither then nor now governments and banks around the world have a unified approach to this issue. The U.S. and Canada are trying to integrate cryptocurrencies into the existing legal framework, which causes a lot of problems for both regulators and industry players. Although, in general, cryptocurrency in this part of the world is warmly welcomed and the largest markets and exchanges are operating here. 

In Asia, they are trying to use blockchain and cryptocurrencies to improve the existing financial system. But countries’ understanding of this process is different: while Japan recognized bitcoin as a means of payment, China has taken the path of blockchain monopolization by the state. The legal framework for cryptocurrencies in Europe is rather vague and varies from country to country. Strict rules are set only for procedures. The key regulators in Eastern Europe are Russia and Ukraine with different positions on cryptocurrencies. In Russia, a law came into force, which defined cryptocurrencies as property but prohibited their use as a means of payment. Ukraine passed a law to regulate the circulation of cryptocurrencies in the country.  Other countries either follow the example of their larger neighbors or still do not understand how to regulate cryptocurrency, which is not surprising, given the complex economic and technical nature of cryptocurrencies. Cryptocurrencies have become part of the global economy. That is why in the last few years we have seen a tightening of regulation not even so much of cryptocurrencies themselves, but of the market ecosystem: KYC on exchanges, transaction monitoring of individual wallets, anti-money laundering, and much more. Even in the EU, where it has not yet been decided what to count cryptocurrencies as, exchanges are subject to AMLD5 rules.

Currently, there is no legal and regulatory framework in the world that establishes reference rules governing cryptocurrency ICOs. It follows that and there are no legal protection mechanisms for both investors and persons issuing cryptocurrency tokens. Now in some countries, there are already attempts to include crypto investing in the legal field and giving cryptocurrencies an official status. It is possible to consider these attempts in the creation of conditions for the regulation of the new instrument of financing. An illustrative example is Japan, which was the first country to equate digital to real money, legalized cryptocurrency exchanges by developing rules for their and, as a consequence, created a basis, but not a systematic benchmark for procedures similar to ICOs.

The example of these countries has shown that defining the legal status of cryptocurrencies and the processes of Initial Coin Offerings creates guarantees for participants and players in the market itself, and thanks to this there are prerequisites for the emergence of crypto-investment centers. Of course, the lack of legal regulation provides freedom, nevertheless attracting serious players will require certain legislative and legal guarantees.

Conclusions

Take a position

Take a position

5 min reading

If you are new to cryptocurrency and would like to know everything about taking a position, then this article is for you.

to take a position

Take a position

If you are new to cryptocurrency and would like to invest in a position, then this article is for you. Many different trading strategies can be used when trading cryptocurrencies. As an investor, it is important to know your capabilities. When we talk about opening a position, notice that there are two positions: short and long. A long or short investment strategy is commonly associated with hedge funds. 

However, an increasing number of cryptocurrency owners are using the same approach to diversify their portfolios and increase profits. If you are enthusiastic about making money when cryptocurrency prices rise and fall, then you should pay close attention to this strategy. Cryptocurrency traders who decide to go long have a lot of faith in the asset they are buying. What does it mean when traders go long? It just means what they are buying.

History

In the 1850s, the terms “short” and “long” positions became common in American stock and commodity exchanges. The Merchant’s Magazine and Commercial Review, Vol. XXVI, January-June 1852, may contain the earliest mention of short and long positions. Regardless of the names, the period for a short position can be quite long (a week, a month), and the period for a long position can be quite short. The terms short and long were borrowed from the world of traditional finance and adopted by the bitcoin industry.

What is a long position?

A long position is a trading position where a trader buys a currency at a lower price and sells it later at a higher price, expecting an increase in income as the market for that particular currency rises. A long is profitable if the asset goes up in value after the trade is opened, and unprofitable if the asset goes down in value.First and foremost, it is important to note that long positions are always implemented when the traders anticipate that the price of a cryptocurrency will increase, while studying the time frame with which they are operating. 

Let’s look at a simple example to illustrate a long position. Paul, a cryptocurrency trader, after carrying out some technical analysis anticipates that the market will finally bottom out for a cryptocurrency token he likes. After carrying out research and seeing that the volume of graphics is increasing and there is some good news from the development team, he decides to go long. He then trades at a very attractive price and receives the desired amount of tokens and it is only after several weeks that he can be able to ascertain his assumptions. The price between the tokens begins to rise, as well as the value of the asset. If eventually, he notices that the tides may be changing, he could sell his assets to avoid any loss. It is important to note that there is no specific time frame for opening a long position. You can keep it as long as you like.

It is however important to note that whoever will want to take a long position should, first of all, get acquainted with the news in order to perfectly understand the crypto market. 

What is a short position?

A short position is a transaction to sell a financial asset. It is opened in order to make money on a price drop. That is, if a trader realises that the price will fall soon, he can sell the stock now at a higher price, and buy it later at a lower price. The difference will be a profit.

To open a short position, you must wait for a reliable trading signal, calculate the trade in your business plan and open a Sell order. Contrary to the long position, a short position is implemented when the trader foresees that there will be a decline in the price of a digital currency. Just like the long position, the trader will have to ensure that his decision is a result of the market analysis carried out.

A crypto trader uses a short position, assuming that the cryptocurrency market is falling. This is a temporary downturn to your advantage. Simply put, a trader can go on a short position when the price is unable to break the resistance line and therefore starts declining. With short positions, you buy now to sell later and this can be applied with or without margin. However, budding investors should be very careful when playing in uncharted waters with money that doesn’t belong to them.

For example, Courtney believes that the current cryptocurrency market is a bubble that is waiting to explode. She decides bitcoin is ready for a big dip and wants to cut her trade. She borrows a few coins from the exchange and sells them. As expected, the market starts to fall. With the profits she received, she can now buy more bitcoins than she had, pay for the exchange and still make a profit.

There are several exchanges on which you can open long and short positions and anticipate an upward or downward trend. Most platforms that you can engage in margin trading also allow you to open long or short positions. It is risky to open long or short positions. There is more risk in opening a short position. Of course, it is possible that the price of a cryptocurrency will suddenly start to rise after an investor has just sold coins in the hope of buying them back later at a lower price. At that time, the investor had to wait a long time because he now suffers a loss by buying back the more expensive coins. The same, of course, applies to a long position when prices fall.

Another important question is how margin trading enhances the goals of long and short positions. Margin trading can enhance the potential gains from long and short positions through leverage – i.e. borrowed funds. A long or short position may be profitable even if the currency is volatile. However, experienced traders choose to trade on margin because it can increase profit margins many times over. Although the risks increase as well, this is why margin trading should be used with extreme caution. 

Trading on margin includes trading with leverage. This can be advantageous for both long and short positions. Margin deposits use funds allocated by third parties, such as an exchange trading floor or other traders, who are encouraged to contribute their funds. This allows you to invest larger amounts with leverage, and multiply your profit potential by several times. Margin trading is one tool that allows you to increase the profit potential of long and short positions.

In a nutshell, the decision to take a long or short position depends on the trader and the goals he wants to achieve. However, it is always advisable for beginners to be careful when trading. So, after understanding the different positions or strategies in the crypto market, we invite you to take a position and start trading now.

Conclusions

Invest all savings in Bitcoin

Invest savings in Bitcoin

6 min reading

You want to increase your savings with cryptocurrency? How to do it and not to lose money? We will help you to understand it.

Invest all savings into bitcoin

Can I invest all my savings in Bitcoin?

For many novice traders, investing in cryptocurrency is not easy to understand. But at the same time, some experienced investors earn money and grow their savings with the help of cryptocurrency. As the price of cryptocurrencies is very volatile, you must first decide how much you can afford to lose. When the price of an asset goes up, it can go down, and vice versa. And therefore the risk of losing savings is possible.

Decide how much you want to invest

You need to decide which assets you want to invest in, but it is better to choose several cryptocurrencies. Experienced digital currency traders know that investing in only one currency is very risky. To build your portfolio, you must analyze the price charts and the market situations. To invest effectively, multi-level analysis of the stock market must be carried out. Depending on the volume and duration of the investment, two main approaches are used: technical analysis and fundamental analysis.

What to take into account

Both methods are equally indicative of market conditions and complement each other. Technical analysis forecasts future price movements based on an analysis of past price changes. It is based on analysis of price time series, most frequently on charts of different timeframes. In addition, it uses information about trading volumes and other important statistical data. Fundamental analysis is used to examine the financial and economic condition of industries, individual companies,  and their investment attractiveness. It is also used to determine the real or “fair” value of securities with a high degree of certainty.

Investment into bitcoin

Bitcoin is for sure the most popular crypto. Bitcoin is now in fact an international currency, which is used by its holders, like any other, for settlement, purchases, and investment of funds. A distinguishing feature of Bitcoin is that it is created based on blockchain technology and is not presented in the form of cash. 

The Blockchain is a huge database in which all operations (transactions) are recorded, where each subsequent operation is linked to the previous one. The main advantage of this system is that the information about all transactions is distributed to thousands of computers on the network. It is believed that this ensures that Bitcoin cannot be counterfeited.

Why bitcoin?

There are a number of reasons why people decide to invest in Bitcoin. To start with, BTC has a leading position and has long been globally recognized in the cryptocurrency market. This cryptocurrency is constantly growing and is sustainable itself. Bitcoin is also liquid and volatile. But it is worth remembering that in addition to BTC, there are many more cryptocurrencies, and you also need to invest some time on it to understand the underlying project and decide if it is worth selecting them in your portfolio. Do not forget that in order to start investing in cryptocurrency, you first need to study several investment strategies that will help you in lowering risks and losses. Now let’s take a look at the strategies. The strategy of familiarity with portfolio investments – an investor is just starting to interact with portfolio investments and is being cautious. The strategy of conservatism – an investor seeks to maintain balance in the investment portfolio. Diversification strategy – an investor reallocates assets and resources to different investment portfolios to make them more efficient. Liquidity strategy – an investor chooses the most attractive projects with high liquidity.

Your crypto portfolio

All strategies use two key metrics: profitability and risk. There is also a third metric, liquidity. Consider portfolios in developed capital markets with large trading volumes. As a result, a portfolio is shaped in the way these criteria are managed. So, what types of portfolios exist? Let’s start with Growth portfolio. This is based on a strategy of seeking out and including stocks of growth companies. It is made up of stocks in companies that have shown maximum growth in recent periods. A portfolio of undervalued companies – formed shares of undervalued companies that have the potential to grow in market value. The financial condition is assessed using the following ratios: liquidity, profitability, turnover, solvency. There is also such a portfolio type as fixed income and minimal risk portfolio. This investment portfolio includes assets that provide a fixed level of return most commonly: bonds, dividend stocks. “All season portfolio” will yield a return irrespective of the economic situation on the market. It may include equities, government bonds, real estate, commodity futures. And last but not least, index-based portfolio strategy. It consists of following a market index.

You must choose the method through which you can purchase crypto tokens. It is necessary to buy cryptocurrency only on serious platforms with a strong reputation that guarantees the safety of your financial transactions. 

You can start buying bitcoin in small amounts. You can make money with cryptocurrency in different ways: actively trade digital coins or choose to invest with long-term goals. Another, even more, passive option is mining, but it is quite expensive in terms of hardware and energy consumption. All options have their advantages and disadvantages according to your budget.

Reading the news is not enough to start investing in cryptocurrency properly. It requires at least basic technical analysis skills. This will help you keep your savings and increase your income.

Conclusions

What are cryptos used for?

What are cryptos used for?

5 min reading

You have some crypto but don’t know where to use it? Keep reading.

What are cryptos used for

What are cryptos used for?

With the rapid development of cryptocurrency, more and more people become interested in how to get the crypto-assets and what is possible to buy with crypto coins. If you do not want to trade or invest, then you may think about what you can buy with your bitcoin or other cryptos. There are many companies, shops, and online resources that are ready to accept payment in crypto coins. In the article, we consider the issues that should be taken into consideration and what you can buy with cryptocurrency.

Pros and cons of cryptocurrency

Cryptocurrency is quite an unusual and convenient means of payment, that you can use almost everywhere. But first, let’s dive into details and think about its pros and cons. The well-known fact is that cryptocurrency is an extremely volatile asset, except in the cases when we talk about stablecoins. Stablecoins are the type of cryptocurrency that is determined to prevent the instability of crypto-assets price rates and attract more customers to the industry. Stablecoins can be used as a form of saving or insurance costs. There are such examples of stablecoins like Tether, True USDT, Gemini USD, etc. The level of interest and the volume of resources attributed to stablecoins is striking and shows that stablecoins are considered to be an important part of the digital asset ecosystem. In other words, stablecoins can promote the use of cryptocurrency in the world and popularize it. 

Payment with cryptocurrency

If you want to pay with crypto for something, keep in mind that not every country allows you to do that. The reason is that nowadays many countries are not sure about how to consider crypto and are not ready to accept it as a means of payment due to its volatility and unpredicted nature. Before making any transaction with cryptocurrency, make sure you are allowed to do that.

But there is a wide range of countries that are quite friendly to the new way of payment as the USA, Canada, Netherlands, South Korea, Malta, etc. Nevertheless, many countries have a heated discussion about the recognition of the crypto-asset as a full-fledged currency or means of payment.

The range of purchases you can make is really impressive. Cryptocurrency can be accepted as payment in cafes (Subway, Starbucks, Burger King), services (AT&T, eGifter, Purse), online shops (Rakuten, Shopify, Bitplaza, Amazon), software and hardware manufacturers (Microsoft, Dell, Ledger). You can even book a plane ticket or a hotel room with cryptocurrency (aBitSky, Travala, AirTreks). Now, and that has been considered as one of the most important announcements of 2020, we have also PayPal that allows you to pay in crypto in more than 24 million shops worldwide.

Cryptocurrency development has also led to the fact that there are many organizations as UNICEF that accept donations with cryptocurrency!  For instance, the Water Project’s goal is to provide access to drinking water in Africa countries. Each person can make a donation to the charity organization in Ether, Bitcoin Cash, Bitcoin, or Litecoin. Helping has never been so easy with crypto. Any caring person can send a donation to those who require it.

However, all the facts above prove that cryptocurrencies still have significant opportunities for spreading all around the world. The cryptocurrency market tends to grow and expand, arousing interest and attracting new people to the world of crypto.

Conclusions

Nodes

nodes

5 min reading

Discover what are nodes in terms of crypto-currency mining!

What are nodes

What are nodes?

The development and launching of cryptocurrency have increased the opportunities to make money for people.  You might have known about such ways to receive coins as mining or trading. But did you know what a node is in the crypto world? In the article, we explain the notion of the node, why and how it is used.

What is Node?

Let’s first determine the meaning of the node. Node is any computer or device connected to the blockchain network. In other words, any of the network participants can be a node and support the correct network functioning. The nodes of the decentralized network use peer-to-peer protocols in order to exchange recorded information about blocks and transactions without any centralized mediator. The amount of stored data depends on the type of node. Moreover, the network users distributed around the world provide secure and private transactions, being the main technology for transmitting the money and conducting transactions on the chain. Thus, if one node notices a violation of the rules of transactions within the system, then the whole transaction is rejected. It relates to the cases when all the communication nodes have validated their legitimacy.

Types of Nodes

Important to note, that in order to prevent monopoly in blockchain, a hard fork is necessary in the case of a 51% attack. In this way, the blockchain participants (nodes) have to follow new rules of consensus to maintain the network and handle the threat. There are several kinds of nodes according to the distribution of rights. We can define full nodes, light nodes, and miner nodes. Each of them has its functions and distinct features. 

    • Full nodes are communication nodes that work separately from other ones. Also, they store any data that was added to the blockchain network. The main feature of full nodes is that they operate separately and completely autonomously from each other. Besides, full nodes verify and validate all transactions by themselves.

    • Then, everyone can check or track the correctness of the information. Full nodes support the functioning of all cryptocurrencies, based on proof-of-work algorithms. Also, a bitcoin node is a full node that keeps the information about confirmed transactions. A full bitcoin node can be installed using the software. Bitcoin Core is the most commonly used. However, a network node is a key factor that creates, receives, and transmits messages. Node follows consensus in the network, collects and records transaction data, and stores confirmed transactions. Also, if a node tries to spread the wrong information, other nodes quickly recognize and disconnect them from the network. There are full, light, and miner nodes but they require a piece of special equipment to connect to the other nodes and synchronize with them.

    • Miner nodes use such hardware components as video cards, processors, or ASIC to solve a cryptographic problem. The first miner node to solve the problem transmits the results to the network for verification by the full nodes. Once the consensus is reached, the miner node can add a block to the blockchain. Miners are paid with some amount of coins for their work and network commissions. The user can also work in a pool of miners in order to increase the chance to get a reward by coins.

    • Light nodes are less independent and rely on the full nodes. They support only headers of the block transactions without the full information. Light nodes use the blockchain network, but do not function as full nodes. Moreover, light nodes do not provide the security of the network because they don’t have a copy of the blockchain and do not verify or confirm transactions. The users just can check the changes in the block of transactions but do not download the full information blockchain.

Conclusions

Take profit

Take profit

5 min reading

Learn more about the risk management: Take profit

Take profit- article

Take profit

The main goal of every trader is to get the most profit and not to go into losses on such an unpredictable crypto-currency market. If you are a newbie, the crypto-currency market may confuse you at first, but such tools as “stop loss” and  “take profit” will come to the rescue and make your trading a bit easier. In the article, we will give you an explanation of what profit order is and how to set it properly. 

What is take profit?

Take profit order plays a key role in various trading strategies with a variety of assets: from stocks to crypto-currencies. When prices rise and the last traded price reaches the profit price, the orders serve as an upper limit and ensure that assets are sold before prices start to fall again. Therefore, take profit allows you to close a position when the price changes in your favor and to set a target profit. You can also use take profit orders to open a position.  The main task of orders is to control trading when the user is away.

For example, if the user cannot constantly monitor the market, such a function as take profit is quite useful and even irreplaceable. Indeed, in the absence of a trader, the market can turn suddenly and go in the opposite direction, and in a short time a profitable trade turns out to be loss-making. Stop loss will help keep losses to a minimum in such a situation. The opposite is also true: if at some point a strong movement brings a deal into a good profit, take profit will help fix it before a rollback occurs in the opposite direction. Do you want to learn more about stop loss? Read the educational article here.

Advantages of take profit order

Moreover, the advantage of take profit order does not allow emotions to get control over you when the market trades intensively and rapid fluctuations take place. Opening a trade, choose the price when you close the position without stress, instead of succumbing to emotion and selling assets hasty. Using take profit order, traders do not need to sell the cryptocurrencies manually and constantly monitor price rates throughout the day. 

Though take profit is quite a precise tool, it is possible that the order will be filled but price rates will keep growing. As a result, the trader may skip potential gains. However, everyone can make a mistake, so before setting the take profit orders be sure that the settings are correct. In the case of cryptocurrencies, the wrong order setting can be costly for the trader.

Why?

However, it is important to note that use key support and resistance levels to correctly determine price targets. According to the studies, it is recommended to set the take profit target at the mark that defines the nearest resistance level or close to it. As no one guarantees you that the price will continue to rise above the key level. However, following these simple rules will allow you to get your profits on time, avoiding unnecessary stress, and understand the basic principles of risk management.

Conclusions

Stop loss

stop loss

5 min reading

Discover how to prevent possible losses on the crypto market.

Stop loss_Risk management

Risk management (stop loss).

Introduction

Exchange crypto trading is closely connected with multiple risks. Therefore, investors have come up with different ways not to go bankrupt. Stop loss is one of them. 

What is stop loss?

There is an opportunity in the market to limit potential losses. You just set up a stop loss and the assets are sold when a certain level is reached. Such exchange orders are called stop losses. The main purpose of a stop loss is to limit the trader’s losses on each position per share. When you don’t have enough time to sit in front of your computer and monitor everything yourself, it is good to have a tool that can do it for you.

Do I need a stop loss in crypto trading?

On the one hand, traders argue that stop loss allows you to limit losses and call it one of the main risk management tools. On the other hand, crypto traders point to false positives and exit from a transaction at the most unfavorable price. If you are a newbie, a stop loss order will help you to avoid possible losses while practicing. In general, many experts consider this tool of risk management quite useful for everyone, not only for novice traders.

First of all, stop loss insures the investor against losses. It is believed that crypto trading is dangerous without using a stop loss. Stop-loss is also useful when the investor does not have time to wait around at the computer. It helps limit losses in the case of force majeure such as power outages or malfunctions on the exchange platforms. Stop losses can also be useful in trades when the informational background itself is not enough to open a position. Then results of the technical analysis can help to create an opportunity for a good trade. Often, stop losses are not used for long-term investing based on distinct fundamental factors. Fundamental factors include macroeconomic data, operating indicators, industry trends, and others. If you are a newbie in using stop orders, it is better to stick to market orders as they are easier to set up and execute. Also, remember to check the relevance of your pending stop losses in your account.

To understand when to use stop loss, ask you the following questions:

    • What is the maximum loss I am willing to incur on this order?
    • What is the normal trading volatility of the instrument I trade in the stock market?
    • What is your trading strategy?
    • What funds are available for trading?

However, it is still necessary to limit losses in crypto trading.  Mainly, risk management is implemented at the expense of the number of funds invested in each trade. Therefore, such an instrument as stop loss is just a tool that helps you keep trading profitable. You should be confident about the money you are ready to invest in trading.

Trailing Stop loss

A Trailing Stop Loss is an order that is planned to assist you with securing benefits while safeguarding you from day trading losses. It covers the amount that will be lost if the exchange does not work out.  This sort of request changes over into a market request when the security cost arrives at the stop cost. Trailing stops can be set up to operate directly on cryptocurrency trading or exchange platforms and can be physically checked and changed by the trader.

When the Trailing Stop loss order is set, the terminal continually calculates the number of points between the entry point and the current price. If the required “gap” is achieved, the Stop Loss is established in accordance with the specifications given. As soon as the price moves in the desired direction, the Trailing Stop Loss follows in proportion to the predetermined interval. Also, the Stop Loss does not change if the trade loses money. As a result, in the case of an unfavorable market movement, the position of terminating the transaction is automatically locked at the Stop Loss value.

However, it is still necessary to limit losses in crypto trading. Mainly, risk management is implemented at the expense of the number of funds invested in each trade. Therefore, such an instrument as stop loss is just a tool that helps you keep trading profitable. You should be confident about the money you are ready to invest in trading.

Conclusions